Finance Friday #austerity
It’s too early to predict the full result of the general election, but it seems likely that the Conservatives will have a thin majority. We can expect more austerity and cuts, so how will that affect investments?
I’m expecting the stock market to do quite well, particularly the FTSE 100, but investors will have to choose wisely. Companies catering for the top end of the market will do better than those focused on the north of England or Scotland. A the time of writing, the FTSE 100 is up 1.41% and that reflects the sentiment of investors. Will the rich get richer and the poor get poorer? It seems likely investors will be rewarded more as companies chase investment. Markets work on supply and demand, there will be a demand for investment. Will that investment come from banks?
The banks are up this morning with Lloyds share price up by a massive 6%. The big construction firms are benefiting too. The supermarkets are doing well, but that seems a risky sector. All the major companies have been cutting back and closing stores, with increased competition from Aldi and some from Lidl. Probably the best one is Tesco, who are recovering from their problems and that has shown in the share price. Sainsbury’s might recover too, but I wouldn’t invest in Morrison’s at the moment.
It’s always difficult selecting investments, but we seem to be on course for tight economic policy and an environment of intense competition. It could be an environment like after the last general election when we will see some big companies fold. We can learn a little from the past, when Comet failed, it was an opportunity for Dixons. I am expecting a supermarket group to fail this time around and maybe other retailers. Poundland needs to expand and innovate to survive. They can’t really put up prices can they?
I remember the conservatives winning a second term under Thatcher, so we can expect more of the same. In 2020, Labour could sweep to victory with a new leader, so we have to think ahead. The Liberal Democrats are more like a Liberal dinner party now; it will take decades for them to recover. Finance is always on people’s minds and although the Lib dems campaigned for tax cuts for low paid workers, they didn’t listen to the people.
I might know by next week what my investment intentions are and hopefully I’ll be buying this month. That’s all for this week, you can subscribe to this blog, using the widget in the sidebar or follow me on Twitter for updates.